Topic 413 - Rollovers from Retirement PlansA rollover occurs when you withdraw cash or other assets from one qualified employer
retirement plan and contribute all or part of it within 60 days to another qualified
retirement plan or traditional IRA. This transaction is not taxable but it is reportable
on your Federal Tax Return. You can roll over most distributions except for:
The nontaxable part of a distribution, such as your after–tax contributions
to a retirement plan (in certain situations after tax contributions can be rolled
over),
A distribution that is one of a series of payments based on life expectancy or
paid over a period of ten years or more,
A required minimum distribution, or
A hardship distribution.
Any taxable amount that is not rolled over must be included as income in the year
you receive it.
If the distribution is paid to you, you have 60 days from the date you receive
it to roll it over. Any taxable distribution paid to you is subject to a mandatory
withholding of 20%, even if you intend to roll it over later. If you do roll it over,
and want to defer tax on the entire taxable portion, you will have to add funds from
other sources equal to the amount withheld. You can choose to have your employer transfer
a distribution directly to another eligible plan or to an IRA. Under this option,
taxes are not withheld.
If you are under age 59 1/2 at the time of the distribution, any taxable portion
not rolled over may be subject to a 10% additional tax on early distributions. Certain
distributions from a SIMPLE IRA will be subject to a 25% additional tax.
For further information about rollovers and transfers, refer to Publication 575 .
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